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The unintended impact of tax and expenditure limitations on the use of special districts: the politics of circumvention

Pengju Zhang ()
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Pengju Zhang: The State University of New Jersey - Newark

Economics of Governance, 2018, vol. 19, issue 1, 21-50

Abstract: Abstract The increasing trend of special districts deserves more attention as it raises concerns on the efficiency and accountability of the fragmented local governance system in America. This paper examines whether the rapid growth of special districts can be partially explained by the expansion of state-imposed tax and expenditure limitations (TELs) during the last several decades. Using panel data from 1972 to 2007, this paper finds that TELs produce unintended circumvention effects among local governments. Specifically, the results reveal TELs motivate local general-purpose governments to create new special districts as an institutional strategy to evade the fiscal constraints imposed by the state.

Keywords: Special districts; Tax and expenditure limitations; The politics of circumvention; State and local public finance; Fiscal federalism (search for similar items in EconPapers)
JEL-codes: H11 H20 H70 (search for similar items in EconPapers)
Date: 2018
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